Levelized Cost of Energy and Levelized Cost of Storage 201
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Additional highlights from LCOS 4.0:
Lithium-ion remains the least expensive of the storage technologies and continues to decrease in cost due to improved efficiencies and a maturing supply chain. However, some of those gains may be mitigated by rising cost pressures from higher commodity pricing (e.g., cobalt and lithium carbonate) and tightening supply.
Project economics for a variety of illustrative energy storage applications have modestly improved year-over-year, reflecting improved costs rather than rising revenues, which remain dependent on local market dynamics or utility tariffs. Ancillary service products (e.g., frequency regulation), demand response and demand charge mitigation represent potentially attractive revenue opportunities.
Combining energy storage with solar PV can create value by sharing infrastructure (e.g., inverters, interconnection), reducing curtailed production, capturing “clipped” solar production and/or through charging cost savings. Currently, the economics for solar PV + storage systems are most attractive for commercial use cases, but remain modest for residential and utility-scale projects.